Transition management survey methodology

Global Investor/ISF requests the users of transition
management (TM) services to rate the performance of the firms
they have used over the previous twelve months.

Ratings are collected from one (unacceptable) to seven
(excellent) across 11 service categories (transparency of
counterparty/liquidity provider was added to the 10 categories
in last year’s survey).

Respondents can rate up to 10 TMs.

All TMs that receive the minimum number of responses for a
table are included regardless of whether the TM actively
participated in the survey (i.e. asked their clients to
participate).

To be eligible, a transition must:
• Be governed by a Transition Management Agreement (TMA);
a side letter to an existing master TMA; or be executed by a
dedicated transition management team
• Include project management, pre-trade analysis,
implementation and post-trade analysis as part of the
transition mandate

In 2013 Global Investor/ISF introduced a new format for the way
the TM survey results were presented, with TMs appear in
alphabetical order in every table and winning scores
highlighted. This has been retained for 2014.

For 2014 there has been further development. The unweighted
tables remain but are now referred to as 'raw
data’ tables. This should make the meaning of the
tables clearer to those unfamiliar with the survey.

The weighted tables have undergone a more significant change.
The new weighted tables combine the calculations that were used
to create the 'weighted by size’ and 'weighted by
importance’ tables of previous years –
there is now a two-stage weighting process that creates one
type of weighted table.

The subset tables are consolidated into a single table.
Likewise, the service categories are presented in a single
table.

CALCULATION METHODS

Raw data tables The raw data tables contain scores that are simple
averages of all valid responses. All categories have equal
importance.

Weighted tables The weighted tables take into consideration the size
of the client of the transition manager, the importance that
clients place on each of the service categories and regional
variations.

1) Size of client: The first stage gives an
increasingly greater weight to the views of larger clients of
transition managers. As previously, introduced for the 2013
survey, the weightings are centered around one to preserve
comparability with unweighted scores. The weights are:

2) Importance of service categories: The
second stage of the weighting process introduces a factor for
each service category depending how important the clients of
transition managers consider that category to be.

The respondents are asked to rank the categories in order of
importance; these preferences are aggregated to create a weight
for each category.

3) Allowing for regional variation: It is an
ongoing observable phenomenon – across all Global
Investor/ISF surveys – that survey respondents in each
of the three regions vary considerably in their generosity to
the firms that they are ranking.

In the weighted tables, the scores between regions are
normalised (so each continent has the same average
score).

Without normalisation, there would be an inbuilt advantage for
firms that only qualify in the two most generously scoring
continents. It should therefore encourage greater participation
globally and also allows for easier comparison between
continents.

HEADLINE TABLES

The headline tables contain separate columns for Emea, the
Americas and Asia Pacific.

There are also a 'global total’ columns. This is
calculated by adding the scores achieved in all three
continents. If a TM qualifies in two continents only these two
scores are added together.

The final column is the average score column. This is the
average score achieved across each of the continents for which
the TM qualifies. If a TM qualifies for two continents, its
average score is the average of just these two scores (i.e. the
calculation does not involve adding a zero and dividing by
three). A TM must qualify in two regions to be included in this
column.

The footprint tables have been removed for the 2014 survey
(which were just unweighted scores multiplied by the number of
responses received).

SUBSET TABLES

Tables are also produced from groups of responses that fulfill
certain criteria. These provide the market with tailored
ratings of firms for specific types of transition. For example,
a huge pension fund may only be interested in transitions above
$1bn. There are seven such subsets – but these are
only published where meaningful comparison is possible, at the
discretion of Global Investor/ISF. These are:
• Governed by a TMA A Transition
Management Agreement (TMA) is defined as a legal contract
between the contracting TM and the client (respondent).
Respondents are asked whether or not they signed a TMA (or
included as a side letter to an existing TMA) and responses are
only included where this had been done.
• Asset management respondents Only
includes ratings by asset management respondents
• Pension fund respondents Only includes
ratings by pension fund respondents
• Transitions over $1bn Only includes
responses from respondents that have issued transition
management mandates worth more than $1bn over the past 12
months.
• Respondents with assets over $3bn
Includes ratings by respondents that have assets under
management (AuM) of $3bn or greater
• Respondents with assets under $3bn
Includes ratings by respondents that have assets under
management (AuM) less than $3bn

SERVICE CATEGORIES

Respondents are asked to rate their TMs across 11
service categories. Their score for each category is an average
of all valid responses (after the response that gave the
highest and lowest average score has been removed). These
categories are:
• Accuracy of pre-trade estimate
• Operational efficiency
• Pre-trade analysis
• Post-trade analysis
• Project management
• Relationship management
• Reporting during transition
• Risk management
• Trading/execution
• Transparency of fees and costs
• Transparency of counterparty/liquidity provider (new
this year)

Qualification criteria

Qualification in Emea, the Americas and Asia Pacific
requires 10, 10 and five responses respectively. To qualify
globally, the TM must qualify for a minimum of two
continents.

To qualify for each subset (such as 'governed by a
TMA’) a minimum of ten responses is required
globally, apart from 'asset management
respondents’ and 'respondents with less than $3BN
AuM’ that require five.

To qualify for each category, TMs need to receive 25 responses
in that category. TMs can qualify for some categories and not
others (i.e. for example if one of the 25 respondents did not
give a rating in every category).

Where more than one person from the same entity rates the same
TM in the same region an average is taken of the scores and it
only counts as one response. This is considered to be a
'grouped response’.

A response is considered valid if the respondent provides a
rating in at least six out of the 11 service categories (i.e.
an n/a is not considered a rating).

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